I wrote that the Treasury’s Quarterly Refunding Announcement could be the largest market-moving event of the week, and it lived up to the hype yesterday.
The Treasury plans to borrow $760 billion in the first quarter of this year, down from its prior estimate of $816 billion.
The announcement from the U.S. Department of the Treasury at 3:00 p. m. sparked a huge move higher on convincing volume. There is no doubt panic buying had fence-sitters reacting to catch up. The overall volume on the session wasn’t abnormally large. Still, the absence of sellers combined with mad dashes of buying was reminiscent of Black Friday shopping before the online options became a powerful force.
The Ten-Year bond yield retreated yesterday -1.6% on the session.
Yellen Pulling the Strings
Yesterday’s announcement is an estimate. Since the first quarter of fiscal year 2022 (FY22), initial borrowing estimates have been far less than the actual amount, but revised estimates have been higher than the actual amount.
Lots of Green
The Heat Map had a solid session, with ten of eleven sectors closing higher (Energy (XLE) cooled).
Apple (AAPL) stands out in the crowd, but the real story continues to be the ‘Magnificent Seven's’ and Eli Lilly's (LLY) dominance.
Market breadth was overwhelmingly positive.
The Pros Panic-Buying
This current leg higher is all about professionals playing catch up. The National Association of Active Investment Managers' number has spiked to 84 from 53.
Big-time earnings releases set the pace today and the rest of the week until the jobs report on Friday.
Futures are holding up nicely, all things considered, including another disastrous regional Fed Manufacturing report. The Dallas Fed Manufacturing print was -27.4 from -10.4 in the prior month and against consensus of -11.0.
The details are ugly.
UPS missed the Wall Street consensus on revenue and offered full year guidance below the street, as revenue per package slipped to $13.11 (consensus $13.28).
Management also announced it would lay off 12,000 workers. That makes the huge union victory on August 23, 2023, feel pyrrhic.
On the other end of the spectrum, General Motors (GM) posted a monster quarter. Now focused on selling gas-powered vehicles, the company crushed consensus on the top and bottom lines.
The FY earnings per share guidance of $9.50 (high-end) topped the consensus $7.70.
The biggest earnings beat came from Super Micro Computer (SMCI), which also happens to be the largest component in the Russell 2000.
|Charles, the one guest you brought in yesterday on the 2 PM show, explaining that the Treasury and Fed-R can overlap in similar ways around expensing (hope I got that correct) portions of the gov debt was interesting. I'm still trying to rap my head around that and how or what to pay attention around both down the road.
Terry Dowler on 1/30/2024 9:39:45 AM
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